Geithner can still pay off for Obama

Geithner, though considered a brilliant policy wonk and financial strategist behind closed doors, has not been a hit with the public or Congress as the administration struggles to tame the economic crisis.

Instead, he has become the administration's chief magnet for negative attention. He spent his confirmation hearings explaining why he failed to pay some of his taxes. He muffed the rollout of his most important policy initiative, the bank rescue plan. He failed to stop AIG from paying out $165 million in bonuses -- which reminded Congress and the public that he was one of the people who presided over the AIG deal in the first place.

Cabinet secretaries are supposed to deflect fire away from the president, not draw it toward him. But President Obama is now spending a good chunk of his time coming to the defense of his beleaguered Treasury chief. "He is a smart guy, and he's a calm and steady guy," Obama said in his appearance on Jay Leno's "Tonight Show" on Thursday, a deliberately chosen opportunity to reach out to middle America. "I don't think people fully appreciate the plate that was handed him. This guy has not just a banking crisis; he's got the worst recession since the Great Depression. ... I think Geithner is doing an outstanding job."

The standard Washington wisecrack any time a president expresses public confidence in a subordinate is that the poor fellow's days must be numbered. But in this case, White House aides are unanimous in insisting that Obama likes his Treasury secretary and wants to keep him. They say the president esteems Geithner's intellect, values his understanding of the financial markets and marvels at his work ethic. (Treasury hasn't released any of the details of the bank rescue plan, but it has revealed that Geithner often gets to work at 6:30 a.m. and leaves at 9:30 p.m., 15 hours later.)

And Geithner has undeniable strengths. His long relationship with Federal Reserve Chairman Ben S. Bernanke and Lawrence H. Summers, Obama's chief economic advisor, has enabled more effective coordination between the Treasury and the Fed than at any time in memory. That coordination was a key factor in the Fed's decision to pump hundreds of billions of dollars directly into the credit system, money that (happily for the administration) doesn't require approval from Congress. Already, the move has increased the supply of low-interest mortgage money, good for the battered housing market. The Treasury secretary has also succeeded in launching two programs to help struggling homeowners avoid foreclosure through refinancing or loan modification.

It's true that Geithner failed to supply details when he outlined his bank rescue plan last month, but aides say he withheld the fine print because it just wasn't ready. In light of the AIG fiasco, isn't it better to take a few more weeks to get it right?

As for the furor over the AIG bonuses, it's a sideshow. By any measure, $165 million is a drop in the bucket of the plans Geithner is running, and whatever they may say now, any member of Congress who was paying attention knew that those bonuses were coming. The blame laid on Geithner over this issue has been disproportionate and unfair.

Still, the anger over AIG may impede Geithner's ability to accomplish other things.

The core of Geithner's banking plan is a proposal for "public-private partnerships" in which government funding is supposed to entice hedge funds and other private investors to help buy toxic assets from banks. But if the AIG furor leads Congress to demand intrusive scrutiny of all the government's co-investors, many of them may take a pass. And the bank plan is likely to require the administration to ask Congress for an additional $700 billion or more to finish the job. If Congress and the public don't think Geithner is fully up to the task, that money will be difficult to get.

So far, demands from Republican backbenchers that Geithner resign aren't serious; no Republican leader and no Democrat of any stripe has joined in (although Democrats have grumbled privately).

For Obama to fire Geithner now would look like a sign of weakness and panic, not strength.

Next week, Geithner is expected to roll out the long-delayed details of his bank rescue plan and begin the work of getting it up and running.

He's also scheduled to appear before a House Financial Services Committee hearing on the AIG affair. It may be an ordeal, but the committee's chairman, Rep. Barney Frank (D-Mass.), actually intends it as an opportunity for Geithner to clear the whole thing up and move on.

That gives Tim Geithner two chances to redeem himself - to show that he's a genuine asset, not a toxic one.